Redburn upgrades Southwest, stays bullish on Delta and United

Investing.com -- Redburn has reiterated a positive stance on U.S. airlines, keeping Buy ratings on Delta and United and upgrading Southwest to Neutral on Friday, citing a strong sector backdrop.

Analyst James Goodall told investors that results through the first half of 2026 confirmed strong leisure and premium demand and an acceptance of higher fares in the domestic market.

He expects lingering capacity constraints, softer low-cost carrier competition and premium strength to drive continued unit revenue growth into next year, with an aged short-haul fleet and accelerated retirements keeping supply in check.

On international routes, Goodall pointed to global wide-body aircraft shortages and growing appetite for long-haul holidays as structural tailwinds, leaving him more bullish on network carriers than low-cost operators.

He said he continues to see "international operations as a bright spot for the US networks," helped by resilient demand and modest seat growth across the North Atlantic.

Redburn lifted its jet fuel cost forecasts materially above consensus, seeing downside to 2026 earnings across the sector, though it argued that is largely priced in after recent share price falls.

Even so, its 2027 forecasts are ahead of consensus for Delta and United, with target prices of $105 and $150, respectively.

The firm was more cautious on American, citing greater fuel-price sensitivity, keeping a Neutral rating and a $13.50 target. It upgraded Southwest to Neutral from Sell, with a $40 target, saying valuations had returned to more reasonable levels and "our Sell thesis has now played out."

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